Sweden's bold gambit

October 20, 1983

The people of Sweden are recognized for having put together one of the world's most pronounced social democracies. Interestingly enough, that experiment in what is a birth-to-maturity welfare state has been based on broad public consensus and compromise. So when thousands of Swedish business leaders and their supporters take to the streets in a massive protest march against a new policy favored by the government of Prime Minister Olof Palme, it is clear that sharp cracks are starting to appear in that northern European nation's longtime social consensus.

What is happening in Sweden today should be watched closely by government leaders in other democratic societies concerned with questions about economic growth and better participation by workers in a nation's industrial base. For precisely because of Sweden's identification with the welfare state - an identification that has soured somewhat in the past decade for many Swedes - the political controversy now being fought in Sweden may offer clues about what exactly are the limits to the growth of government.

At issue in Sweden is a government plan that would - as the government sees it - bring about greater participation by workers in the direction of Swedish industry. Business leaders, however, insist it would effectively ''socialize'' what is left of Sweden's private economy when the government already accounts for 70 percent of gross national product and taxes are severe. Mr. Palme's Social Democratic Party has proposed creating ''wage-earner funds'' that would be turned over to five regional boards appointed by the government and dominated by union officials. The boards would then invest in Swedish industry. Where would the ''wage-earner funds'' come from? From taxes: a 20 percent tax on company profits as well as a small payroll tax.

Would such a plan lead, over time, to the five regional boards in effect controlling Swedish industry? Likely so. Control could conceivably come with just a 10 percent to 20 percent ownership in specific firms. And, of course, there is the obvious linkup between the Social Democrats and Swedish unions.

The proposal - which has yet to be dealt with by the Riksdag, Sweden's parliament - carries the notion of worker participation far beyond anything now under way in most Western industrial nations. In some nations, West Germany for example, it is not uncommon to have union representation on corporate boards. And, of course, workers, through pension plans, often in effect have majority ownership of a firm, although not management control. That is also increasingly common in the US, where corporate pension funds represent a major investment factor on Wall Street.

The Swedish economy certainly needs a jolt. Inflation is 9 percent, the deficit is more than 12 percent of GNP, youth unemployment is growing sharply.

Is stepped-up trade-union and government intervention the answer? Even Francois Mitterrand in France, a Socialist, has run into trouble with his earlier nationalization-oriented policies. And supply-side oriented governments - and approaches - are in place in Britain and the US.

For such reasons, Sweden's new interest in more, not less, state intervention , deserves careful watching.